11 eurozone countries agree to press on with disputed 'Tobin tax'
ELEVEN eurozone countries have agreed to press ahead with a disputed tax on financial transactions designed to help pay for the cost of fixing a crisis that has rocked the single currency area.
The initiative, pushed hard by Germany and France but strongly opposed by Ireland, Britain, Sweden and other free-marketeers, gained critical mass at an EU finance ministers' meeting in Luxembourg, when more than the required nine states agreed to use a treaty provision to launch the tax.
The so-called "Tobin tax", first proposed by Nobel-prize-winning US economist James Tobin in 1972, has become a political symbol of a widespread desire to make banks, hedge funds and high-frequency traders pay a price for the crisis.
"This is a small step for 11 countries but a giant leap for Europe," Austrian Deputy Finance Minister Andreas Schieder said. "The way is now clear for a just contribution from the banking and financial sector for financing the burdens of the crisis."
Finance Minister Michael Noonan rejected the move, saying Ireland would not sign up unless Britain also agreed to the new tax. Mr Noonan poured water on concerns that the decision to create the Tobin tax cast doubts over the future of Ireland's corporate tax rate. Ireland already has a 1pc stamp duty on share dealing.
"We have 33,000 people working in financial services and if we accepted an FTT and Britain did not there would be a transfer of business and jobs to London," Mr Noonan said.
The decision to create a tax despite opposition from a large minority of states raised concerns in some quarters that it could also be used to create a common consolidated corporate tax base, which would create a uniform tax rate across a number of states, and put Ireland's 12.5pc tax rate at risk.
Speaking after a meeting of European finance ministers, however, Mr Noonan dismissed those concerns.
"The CCCTB is not a transaction tax, it's a corporation tax and the precedents have been set already because this is not the first time enhanced co-operation has been used in this regard," the Minister said.